Tuesday, July 10, 2012

Tips for Keeping a Family Farm in the Family

Once upon a time, keeping a family farm in the family meant little more than having a son or daughter who was interested in carrying on the family legacy. Unfortunately, those days have long since passed. No more can a family trust that a green thumb will get them by. For today's modern farmer, business acumen is every bit as important as knowing what fertilizers work best with what crops. That, and keeping the balance sheets steadfastly in the black, are the only ways for modern farms to stay afloat.

Keep Track of Every Expense

To keep the tax man at bay, always keep a detailed record of your earnings and expenses. Software is available to help you, but can become cumbersome quickly. Instead, try a simple paper ledger such as is available from office supply stores. Additionally, try using an accordian file to store your receipts grouped according to their use. That way, they'll be easy to find should you get audited.

Have your children learn business management

Running a farm as a business is more than just planting a seed and watching it grow. You know that, but do your children? It's important for them to know what laws affect the farm, as well as what current legislation with regards to taxation and government oversight. Have a few employees? Learning human resources law isn't a bad idea, either, particularly if you hire enough employees to be part of the Obamacare health care plan in a few years.

Avoid Debt

The old adage that goes “nothing's free” has never been more true than with regards to debt. Although paying cash can be difficult at times, spending on credit costs you additional money, in the form of interest. By paying cash, you avoid mounting interest charges that can grow to overwhelm your monthly income.

Pay Attention to Current Legislation

Occasionally, congress and state representatives do pay attention to the importance of non-corporate farms in the United States, and enact legislation designed to protect small farmers. Rather tha boycotting politics all together, or blindly supporting one side or the other on ideological grounds, vote for the candidates and issues that best represent you. No one worth voting for? Try running yourself. You might just be surprised how much good can be done from a posting like city councilperson.

Plan for the future

Inheritance is one of the ways in which today's small farm gets divided up and dismantled, piece by piece. Even siblings who once might have been totally inseparable could end up estranged from one another over what they feel is their “fair share” That's why it's important to know what your children expect from the estate after you have passed. You certainly don't have to ask them outright, but it's a good idea to pay attention to what they don't say. Does your son or daughter get up with you every morning? Did they attend agriculture classes through school and build a home for their own family nearby so that they could continue to work on the farm? Did their sibling leave to go to law school and never return except for holidays? Only you can determine a fair share of the estate, but be cautious and work to try to understand how the entire family feels before you make a final decision.

Keeping a family farm in the family might well be the toughest thing you'll ever have to consider, but with careful planning and an eye to the future, you can be reasonably certain that your legacy will be around for several generations to come.

No comments:

Post a Comment